The big
bank is shutting down the Old Lane hedge fund once run by Citi chief Vikram
Pandit. Citi, which paid $800 million last year for Old Lane, will buy the
assets of the hedge fund at fair value, allowing investors to redeem their
holdings on July 31.
The world's
largest grain processor was downgraded to ``hold'' from ``buy'' at Citigroup
Inc. because of ``irreparable damage'' to this year's corn crop by flooding in
the Midwest.
Goldman
Sachs Group Inc. added the second-largest U.S. trash hauler by sales to its
``Americas buy'' and ``conviction buy'' lists.
The
provider of gene sequencing equipment will be acquired by Invitrogen in a
cash-and-stock transaction valued at $6.7B, a 17% premium over yesterday's
close.
12.06 18:47
Choppy trading on the last few minutes as crude spikes up again around the NYMEX floor close after relinquishing those earlier noted gains. Contract trades at $137.00 ish, up $0.60
Mitsuru Sahara, senior vice president of forex trading at Mitsubishi UFJ
Bank: “Despite sharp losses on Wall Street
yesterday, the dollar held steady above the Y107 level due to speculation over
a rise in interest rates. Investors are expecting the Fed will raise interest
rates in the near future to combat inflation.”
12.06 18:19
July WTI crude, which was down $4 earlier, just spiked to up $1+. Is now up $0.40 at $136.82
The stock market dips to its lowest level since
shortly after the opening bell, although the major indices are still sporting
solid gains. The ten economic sectors pullback following an increase in
broad-based selling interest. Although well off its high, Financials (+2.6 is
the best performing sector this session, with 86 of its 91 components posting a
gain. KeyCorp (-2.97) is the main laggard after announcing it is raising $1.5
billion in new capital and cutting its dividend by 50% in order to offset up to
$1.2 billion in after-tax accounting charges due to an unfavorable court ruling
regarding its leveraged lease transactions.
Mark Chandler, economist at Scotia Capital: “It was a strong retail sales
report. You can't lay all of it at the feet of higher prices and with the
revisions as well from the previous month, it's an earlier and
stronger-than-expected feature coming from the tax rebate checks.”
The
dollar strengthened to a one- week high against the euro as U.S. retail
sales advanced in May more than economists forecast, raising
speculation the Federal Reserve will increase borrowing costs this
year. An index gauging the dollar against the
currencies of six U.S. trading partners rose to the highest since
February. Crude oil fell as the stronger greenback made commodities
less attractive as an inflation hedge. ``The consumer
refuses to die,'' said Alan Ruskin, head of international currency
strategy at RBS Greenwich Capital Markets in Greenwich, Connecticut.
``That's helpful for the dollar.'' U.S. retail sales
increased 1 percent in May as Americans used their tax rebates to shop,
the Commerce Department reported. That followed a revised 0.4 percent
advance the prior month. The median forecast of 82 surveyed economists
was for a 0.5 percent increase. ``The key downside risk
to the dollar was the consumer,'' said David Watt, senior currency
strategist at RBC Capital Markets in Toronto. ``The tax rebates remove
that risk for a little while. It's certainly bullish for the dollar in
the short term. But it's a Band-Aid solution.'' Traders
bet Fed policy makers are more likely to raise borrowing costs in
August. Fed funds futures on the Chicago Board of Trade show a 60
percent probability the central bank will increase the target lending
rate by at least a quarter- percentage point, compared with a 7 percent
chance a week ago. The U.S. currency was supported by
speculation that finance ministers from the Group of Eight countries
might make comments discouraging the currency's decline at two days of
meetings in Osaka, Japan, this weekend. G-8 officials
will urge emerging nations to stop subsidizing oil consumption and
press regulators, notably in the U.S., to look into the trading that
has driven crude oil to a record, said French Finance Minister
Christine Lagarde.
Paul Ashworth, strategist at Capital Economics: “The unexpected strength of retail sales in May suggests that the tax
rebates are providing a sizeable boost to spending after all. Overall, this is
a strong report, much stronger than we would have expected given that consumer
confidence is at rock bottom. It is now looking less likely that GDP will
shrink in the second quarter after all.”
Stocks popped Thursday
morning as
investors welcomed a $46 billion bid for Anheuser-Busch, a stronger dollar,
weaker oil prices and higher-than-expected retail sales. Stocks tumbled Wednesday, sending the Dow down
more than 200 points as oil spiked $5 a barrel and the Federal Reserve's 'beige
book' survey showed continued economic weakness. But the news was more positive Thursday and
stocks rallied, with investors willing to set aside a management shakeup at
troubled Lehman Brothers and a big rise in weekly jobless claims. Retail sales. Sales jumped 1% in May, thanks to
the government's economic stimulus plan, double what economists were expecting.
Sales rose 0.4% in April. Sales excluding volatile auto sales rose 1.2% in May,
versus forecasts for a rise of 0.7%. Sales ex-autos rose 1% in April. Anheuser-Busch said late Wednesday that Belgian
rival InBev has made a more than $46 billion offer for the maker of Budweiser,
confirming earlier speculation that a merger was brewing. The troubled financial firm Lehman Brothers said
it was replacing two top executives, including its chief financial officer,
just days after announcing a massive $2.8 billion quarterly loss. Lehman stock
fell about 5%. U.S. light crude oil for July delivery fell $4.66 to $131.72 a barrel on the New York
Mercantile Exchange.
Ashraf Laidi, chief currency analyst at CMC Markets: “Euro remains pressured near the lows after the US retail sales figures and their
upward revisions are boosting the dollar across the board. Although the
increased probability of an autumn Fed hike according to Fed funds futures is
expected to bolster the greenback, we warn traders that positive US
data have not always led to sharp losses in EUR. This time may be different,
however, as these figures bolster the case made by the Fed that chances of a
substantial decline in US
growth have dissipated.”
12.06 15:42
July NYMEX contract continues to skid lower, is down $4.00 at $132.39
AUS/USD testing the earlier lows, reported
demand at $0.9330 under pressure, with a break set to expose the May lows at
$0.9278. Techs traders suggest a close under the 55-day moving average at
$0.9416 today for the first time since late March would open up a test of the
100-day at $0.9297.
"Initial claims, which are a good indicator of layoff activity, jumped
in the most recent week and is now above its year-to-date average. The
4-week average appears to be settling in at around 370k, about 45k
higher than its average in 2007. Continuing claims, which are inversely
related to job creation, surged this week to its highest level in more
than 4 years. More importantly, continuing claims have been on a rising
trend for nearly 2 years, an indication that hiring has weakened."
Also, "Imported goods prices surged again in May for the third
consecutive month, in large part because energy prices continued to
soar. However, non-fuel imported
goods prices are also accelerating and contributing significantly to higher imported inflation."
"we expect the rebate to boost spending over the next few months. But
we expect it to be temporary, acting like a shot of caffeine by
boosting growth in Q3 but pushing growth to negative territory in Q4 as
the caffeine kick fades."
All three of the major indices are sporting solid gains in Thursday's early trade. Each is up in excess of 1.0%.
Only the energy sector (-1.1%) is trading with a loss. Each of the
other major economic sectors is posting a gain. The energy sector's
weakness is most noticeable in the oil and gas services industries.
Business inventories for April increased 0.5%. Economists were expecting an increase of 0.3%.
"Retail Sales were remarkable for the May strength and
revisions to March and April figures. Over the past three months,
total Retail Sales are up at an 8% pace. Excluding auto sales that have
been very weak, Retail Sales were up at a 12.4% pace. Gains were
widespread... Tax rebates amounted to $48 bln in May according to
recently released Treasury statistics. That may account for a good
portion of the advance in sales during the month. April and March
Sales, however, were also revised upward substantially."
Stock futures continue to indicate a positive start to Thursday's
session, though to a lesser extent than earlier: S&P futures vs
fair value: +9.3. Nasdaq futures vs fair value: +13.0.
Crude prices reversed direction in early electronic trading Thursday as
the dollar climbed. U.S. crude for July delivery dropped $2.14 to
$134.24 a barrel in electronic trading.
The government reported increases to retail sales as well as weekly jobless claims.
Retail sales increased 1% in May, compared to an expected increase of
0.5% from analyst expectations. Retail sales, excluding automobiles and
gas, rose 1.2% in May, compared to expectations of a 0.7% increase.
The government reported that new jobless claims jumped to 384,000 for
the week ended June 7, up from 357,000 for the prior week, and
exceeding analyst expectations of 370,000.
Company news: Battered mortgage lender Thornburg Mortgage (TMA) swung to a first-quarter loss of $3.31 billion. The company blamed the loss on delinquent loans. Citigroup said it plans to close down its hedge fund Old Lane
Partners. Citi paid more than $800 million last year for the fund that
was co-founded by CEO Vikram Pandit. Starbucks said it entered a deal with European beverage vender SSP to open more than 150 Starbucks stores in Europe
Dollar gains accross the board as Apr-Mar sales were revised massively higher.
Even if May CPI prints +0.5%, the sales revisions imply consumption is
now tracking a plus rather than a subtraction from real GDP. This
alters the outlook significantly, tilting it towards growth.
EUR/USD bids between have been filled $1.5400/1.5390, more remain at $1.5385/80 ahead of
$1.5365. Offers now seen placed between $1.5455/62, more between
$1.5490/00.
The dollar rose against the euro and yen before a report that may show
a rebound in U.S. retail sales, giving the Federal Reserve more reason
to raise interest rates to curb inflation.
The U.S. currency gained for a third time in four days before the
Commerce Department report that will probably show consumers increased
spending in May using tax rebates.
U.S. retail sales probably increased 0.5 percent in May following a 0.2
percent drop the prior month. The Commerce Department is scheduled to release the report due
at 1230 GMT.
``The market's expecting a relatively good report'' on retail sales,
said Paul Robson, a currency strategist in London at Royal Bank of
Scotland Group Plc, the U.K.'s second-biggest lender. ``The dollar may
be picking up as interest rates in the U.S. are quite low, which may
help the market have more confidence that the Fed will tighten policy
more than the European Central Bank.''
EUR/USD fell from $1.5560 to $1.5400.Bids $1.5380/85, $1.5350/40, offers $1.5455, $1.5490/00 GBP/USD followed euro dropping to $1.9460. Bids $1.9460/50, $1.9420/10. Offers $1.9550, $1.9580. USD/JPY firmed from Y107.30 to Y107.75. Offers Y107.75/00,, bids Y107.00
US data starts at 1230GMT with the weekly jobless claims,
theimport/export price index for May and retail & food sales for
May. Initial claims are expected to rise 13,000 to 370,000 in the June
7 week, while retail sales are expected to rise 0.5% in May on a
modestslowdown in industry light truck sales, a rebound in car sales
and anexpected 0.6% rise in sales outside motor vehicles. At 1400GMT,
US business inventories are expected to rise 0.3% on an already
reported flat reading for factory inventories and a 1.3% jump in
wholesale inventories.
12.06 12:34
May U.S. import prices +2.3%, ex-oil +0.5%, ex-fuel +0.5%.
``Retail sales data should be supportive for the dollar,'' said
Takahide Nagasaki, senior currency strategist in Tokyo at Daiwa
Securities SMBC Co., a unit of Japan's second-largest brokerage. ``Good
figures will also further raise expectations of higher rates.''
Oil resumes overnight
fall on market rumour that Saudi Arabia has agreed to boost oil
production. WTI Nymex crude oil is at $133.76, down $2.62 in the
electronic session.
The dollar rose against the euro and yen before a report that may show
a rebound in U.S. retail sales, giving the Federal Reserve more reason
to raise interest rates to curb inflation.
The U.S. currency gained for a third time in four days before the
Commerce Department report that will probably show consumers increased
spending in May using tax rebates.
U.S. retail sales probably increased 0.5 percent in May following a 0.2
percent drop the prior month. The Commerce Department is scheduled to release the report due
at 1230 GMT.
``The market's expecting a relatively good report'' on retail sales,
said Paul Robson, a currency strategist in London at Royal Bank of
Scotland Group Plc, the U.K.'s second-biggest lender. ``The dollar may
be picking up as interest rates in the U.S. are quite low, which may
help the market have more confidence that the Fed will tighten policy
more than the European Central Bank.''
Traders now bet Fed policy makers are more likely to raise interest
rates in August than to leave them unchanged. Fed funds futures on the
Chicago Board of Trade show a 51 percent probability policy makers will
raise rates by at least a quarter -percentage point in August, compared
with no chance a week ago.
The dollar has risen 2.2 percent against the euro this week after Fed Chairman Ben S. Bernanke said the risk of a deeper U.S. economic slowdown is receding. It's up 1.1 percent versus the yen.
Losses in the euro may be limited by speculation ECB council members Guy Quaden and Axel Weber will highlight inflation risks in speeches today, raising expectation of higher interest rates.
The dollar declined 0.5 percent yesterday after ECB council member
Athanasios Orphanides said policy makers may increase the 4 percent
main refinancing rate more than once in coming months based on
``subsequent data developments.''
``We expect the ECB will raise rates three times this year while the
Fed keeps them on hold,'' said Masafumi Yamamoto, head of
foreign-exchange strategy in Tokyo at Royal Bank of Scotland Group Plc,
the world's fifth-largest foreign-exchange trader. ``Expectations of
higher ECB rates will support the euro in the short term,'' which may
move between $1.53 and $1.58 against the dollar in one month, he said.
- Lack of price stability bad for European economy.
- Raising rates would help get inflation down to target
- Signal from the ECB was for next month, not beyond
Resistance 2: Y108.60 Resistance 1: Y107.70
Current price: Y107.60 Support 1: Y106.50
Support 2: Y106.20
Support 3: Y105.60
Comments:
Dollar advances. The nearest resistance is Y107.60 with stronger resistance
comes at Y108.60 (Feb highs). Break above will point to further rise up
to Y109.00. Support is around yesterday's lows on Y106.50. Below
correction may widen to Y106.20 and Y105.60.
Comments: Dollar rebounds. The nearest resistance lies on Chf1.0440. Break
above will open the way to Friday’s highs on Chf1.0580. Next band of
resistance is near Chf1.0620 (May 08 high). Support is around session low at Chf1.0300. Under that level the losses may
extend to Chf1.0270 and then – to Monday’s low on Chf0.0150.
- Liquidity provision warranted by ongoing market tensions
- Too early to give all clear on financial market turmoil
- ECB in heightened alertness, ready to act
- Sees currently strong upside risks to price stability
- Signs of easing in some financial market segments
- High money market spreads give no room for complacency.
- New trade deal needed to halt protectionism
- UK economy well placed to weather oil price rises
- Expects oil, food prices to continue to rise
- Jobs data shows UK economy is strong
Resistance 1: $1.9660
Current price: $1.9504 Support 1: $1.9490 Support 2: $1.9460
Support 3: $1.9380
Comments:
Cable retreats. The nearest support is yesterday's low on $1.9490. Below losses may widen to $1.9460 (Jun 05 low) and $1.9380.
Resistance comes near yesterday's high at
$1.9660. Stronger level comes at June 10 peaks on $1.9750, then – at $1.9800
(Monday’s high).
Resistance 2: $1.5640 Resistance 1: $1.5590 Current price: $1.5444
Support 1: $1.5430 Support 2: $1.5360 Support 3: $1.5280
Comments:
Euro trades under pressure. Support comes at yesterday's low on
$1.5430 with further level comes at $1.5360 (Jun 05 low) and $1.5280.
Above $1.5590 (yesterday's high) the resistance is
around $1.5640. Stronger level comes near $1.5820.
HSBC
economist Ryan Wang says the Fed's beige book was "generally weak" and
showed "a slightly better (regional) mix than the previous Beige Book
(9 slower activity, 3 steady)." He says "comments from retailers (were)
not particularly impressive... but we still think strong sales at
discounters will boost retail sales for May."
The euro
snapped a two-day decline against the dollar on growing speculation the
European Central Bank will raise interest rates next month while the
Federal Reserve leaves borrowing costs unchanged. The 15-nation currency also traded near a seven-month
high against the yen after ECB Executive Board Member Juergen Stark
said the markets understood the bank's signal to raise borrowing costs
next month. The yen fell as rising stocks fueled demand for purchases
of higher-yielding currencies funded in Japan.
Beige book couldn't fuel any change to a market's breathe. "Economic activity remained generally weak in late April & May."
Three districts described activity as weaker, 4 reported slower or
sluggish growth, and the remaining 5 (Philly, Cleveland, Atlanta, St
Louis, SF) said activity was stable or little changed. Consumer slowed,
input costs rose, high energy prices damped tourism; mfg was soft, real
estate weak, consumer lending softer; retail price reports were mixed.
Report was prepared at Richmond Fed based on info gathered before June
2. The April beige book said "economic conditions have weakened since
the last report," so the most recent reading is a bit improved.
EUR/USD: firmed from $1.5450 to $1.5560/90. GBP/USD: fell to a low at $1.95490 rebounding later till $1.9665. USD/JPY: met resistance at Y107.70, slipping to Y106.54.
US data starts at 1230GMT with the weekly jobless claims,
theimport/export price index for May and retail & food sales for
May. Initial claims are expected to rise 13,000 to 370,000 in the June
7 week, while retail sales are expected to rise 0.5% in May on a
modestslowdown in industry light truck sales, a rebound in car sales
and anexpected 0.6% rise in sales outside motor vehicles. At 1400GMT,
US business inventories are expected to rise 0.3% on an already
reported flat reading for factory inventories and a 1.3% jump in
wholesale inventories.
Japanese shares rebounded as investors snapped
up shares of automakers after analysts said a weakening yen will boost
profit. Fuji Heavy jumped 8.8%, the
steepest climb since April 11 and leading gains on the Nikkei. Morgan
Stanley analyst Noriaki Hirakata raised the carmaker to ``equalweight''
from ``underweight,'' citing strong sales of its Forester sport-
utility vehicle and the weakening Japanese currency. Mazda Motor Corp.
added 5.1%, while Toyota gained 2.4%. Promise, Japan's second-biggest consumer lender,
sank 4%, while smaller rival Takefuji Corp. tumbled
4.8%. A gauge tracking consumer lenders was the
second-biggest decliner among the Topix's 33 industry groups. Daiwa
House Industry Co., Japan's biggest homebuilder, dived 5.8%, the sharpest drop since March 3, after cancelling the
listing of a real estate investment trust. Sun Frontier Fudosan Co., a
provider of property-management services, tumbled 8.3%, while NTT Urban Development Corp. fell 7.3%.
European stocks drifted lower for a sixth day,
the longest losing streak since 2005, on speculation rising inflation
will force central banks to increase interest rates, worsening the
outlook for lenders as the economy slows. Royal Bank of Scotland dropped 9%. Chief Executive
Officer Fred Goodwin said Britain's second- biggest bank faces ``more
bad news than good news'' for as long as 15 months. While RBS is
sticking with its April estimate that this year's credit-related
writedowns will be 5.9 billion pounds ($11.5 billion), Goodwin declined
to say whether the bank will meet analysts' 2008 profit estimates. HBOS sank 12%, less than the 275 pence price of its
rights offer. The U.K.'s biggest mortgage lender fell below the price
of its 4 billion-pound ($7.9 billion) offer amid concern a slowdown in
the real-estate market will erode earnings. Barratt Developments, the U.K.'s second-largest homebuilder by volume, tumbled 21%. Taylor Wimpey Plc, the U.K.'s biggest homes developer, plunged 19%. Persimmon sank 3%, Berkeley slipped 6.4%, and Bellway declined 11%. Redrow lost 19%, and Galliford fell 4.6%. Next Plc dropped 7.4%, the lowest since July 2003. Home Retail Group Plc fell 2.4%, while Kingfisher Plc lost 3.3%.
U.S. stocks fell Wednesday, pushing the
Standard & Poor's 500 Index to its lowest level in two months, as
banks and transportation companies plunged on speculation faster
inflation will force central banks to raise interest rates. Lehman Brothers stock fell as investors continued to
react to the company's huge quarterly loss announced earlier this week.
Merrill Lynch downgraded the stock to "neutral" from "buy."
And Church said that the financial sector was being plagued by vague market rumors that supposedly bullet-proof Goldman Sachs could take a big hit. Anheuser-Busch stock could be active Thursday after
it was announced late Wednesday that Belgian rival InBev has made a
nearly $47 billion offer for the company. Reports suggested InBev was
interested in the maker of Bud a few weeks ago. Shares gained 7% in
after-hours trading. Corporate Express NV, a Dutch distributor of office supplies, accepted an improved $2.7 billion bid from Staples. Alcoa tumbled almost 8% after a JPMorgan analyst
said that the aluminum producer is not looking to sell itself or spin
off part of its business and that this will be a disappointment for
Wall Street.
Nudging back toward reported resistance level at $1.9550, after
rate was dragged lower during the early part of the morning by
euro-dollar's strong sell off to a low of $1.9511. Euro-sterling holds
around stg0.7900 after rate was bought off lows of stg0.7885 by a
European sovereign. Above $1.9550 and rate can edge on toward
$1.9570/80.
The dollar rose against the euro and yen on speculation a rebound in
U.S. retail sales will support the Federal Reserve's case for raising
interest rates.
The currency gained for a third time in four days as a government
report will probably show consumers increased spending in May using tax
rebates. It has risen 2.2 percent against the euro this week as Federal
Reserve Chairman Ben S. Bernanke said the risk of a deeper economic
slowdown is receding. The Australian dollar fell to a one-month low
after the economy unexpectedly lost jobs for the first time in 19
months. The U.S. currency may also be supported by speculation that
finance ministers from the Group of Eight countries will make comments
discouraging the currency's decline at two days of meetings starting in
Osaka tomorrow.Losses in the euro may be limited by speculation ECB
council members Guy Quaden and Axel Weber will highlight inflation
risks, raising expectation of higher interest rates.
EUR/USD fell from $1.5560 to $1.5460. GBP/USD followed euro dropping from $1.9640 to $1.9560/70. USD/JPY could firm from Y106.70 to Y107.35.
US data starts at 1230GMT with the weekly jobless claims,
theimport/export price index for May and retail & food sales for
May. Initial claims are expected to rise 13,000 to 370,000 in the June
7 week, while retail sales are expected to rise 0.5% in May on a
modestslowdown in industry light truck sales, a rebound in car sales
and anexpected 0.6% rise in sales outside motor vehicles. At 1400GMT,
US business inventories are expected to rise 0.3% on an already
reported flat reading for factory inventories and a 1.3% jump in
wholesale inventories.
Japan's benchmark stock indices ended Thursday's session sharply lower,
as global stock markets continue to suffer inflationary jitters. The
benchmark Nikkei 225 was down 294.88 points, or 2.08%, at 13888.60. The
broader-based TOPIX was lower by 26.89 points at 1363.14.
Resistance 2: Y108.60 Resistance 1: Y107.70
Current price: Y107.40 Support 1: Y106.50
Support 2: Y106.20
Support 3: Y105.60
Comments:
Dollar advances. The nearest resistance is Y107.60 with stronger resistance
comes at Y108.60 (Feb highs). Break above will point to further rise up
to Y109.00. Support is around yesterday's lows on Y106.50. Below
correction may widen to Y106.20 and Y105.60.
Comments: Dollar rebounds. The nearest resistance lies on Chf1.0440. Break
above will open the way to Friday’s highs on Chf1.0580. Next band of
resistance is near Chf1.0620 (May 08 high). Support is around session low at Chf1.0300. Under that level the losses may
extend to Chf1.0270 and then – to Monday’s low on Chf0.0150.
Resistance 2: $1.9750 Resistance 1: $1.9660
Current price: $1.9564 Support 1: $1.9490 Support 2: $1.9460Support 3: $1.9380Comments:
Cable retreats. The nearest support is yesterday's low on $1.9490. Below losses may widen to $1.9460 (Jun 05 low) and $1.9380.
Resistance comes near yesterday's high at
$1.9660. Stronger level comes at June 10 peaks on $1.9750, then – at $1.9800
(Monday’s high).
Support 1: $1.5430 Support 2: $1.5360 Support 3: $1.5280
Comments:
Euro trades under pressure. Support comes at yesterday's low on
$1.5430 with further level comes at $1.5360 (Jun 05 low) and $1.5280.
Above $1.5590 (yesterday's high) the resistance is
around $1.5640. Stronger level comes near $1.5770.
12.06 06:00
FRANCE FINMIN: 1Q payrolls revised sharply, over 60,000 rise
12.06 05:49
Major European bourses are initially seen trading flat to lower Thursday. UK FTSE unchanged, the DAX down 16, the CAC down 8 and the Eurostoxx 50 down 10.
